Corporate Fact Sheet December / Corporate Fact Sheet 1 Corporate Fact Sheet December 2014...

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Transcript of Corporate Fact Sheet December / Corporate Fact Sheet 1 Corporate Fact Sheet December 2014...

  • 1 / Corporate Fact Sheet

    Corporate Fact Sheet

    December 2014

    WesternZagros is a publicly-traded, Calgary-based, international oil and gas company focused on

    exploring, developing and producing crude oil and natural gas in the Kurdistan region of Iraq. As only

    the fourth international company to enter Kurdistan, WesternZagros was able to hand-pick its

    exploration block in 2005, recognizing the potential for a huge light oil resource base. The Company

    holds a 40% working interest in two Production Sharing Contracts (PSCs), both of which are on trend

    with, and adjacent to, a number of prolific historic oil and gas discoveries.

    WesternZagros has completed the exploration and appraisal phase on the Kurdamir and Garmian

    blocks and is commencing the development of its crude oil and gas discoveries. Production of light oil

    from the Sarqala-1 well on the Company’s Garmian Block is expected to commence in the first quarter

    of 2015. A recent workover on the Sarqala-1 well increased flow rates and tested up to 11,500 barrels

    per day of 40 degree API oil.

  • 2 / Corporate Fact Sheet

    2 / Corporate Fact Sheet

    1 - See October 2, 2014 Material Change Report for Garmian Block Gross and Working Interest 2P reserves. 2 – Block Gross Mean Estimates of Kurdamir and Garmian Blocks 3 - Total Gross Capacity of Facilities, subject to KRG approval 4 - Management estimates based on Block Gross unrisked 2C Contingent Resources for Kurdamir and Block Gross 2P Reserves and unrisked P50 Prospective Resources for Garmian

  • 3 / Corporate Fact Sheet

    2 / Corporate Fact Sheet

    Large, strategically attractive assets

    Kurdamir: Block Gross Mean Contingent Resources of 976 MMboe, 58% oil (38° to 40° API), low sulphur, low H2S Resource defined by 3D seismic and 3 wells drilling and tested confirming oil Garmian: Initial Working Interest 2P Reserves of 5 MMbbl, oil (38° to 40° API), low sulphur, no H2S Sarqala-1 well produced, in 2012, 1 million barrels under an extended well test confirming reservoir quality

    Significant upside from incremental prospective resources:

    Kurdamir: Block Gross Mean Prospective Resources of 1.6 billion BOE for further delineation drilling includes over 1.2 billion BOE

    downdip from proven oil in Oligocene. Garmian: Block Gross Mean Prospective Oil Resources of 311 MMbbl identified for further delineation drilling.

    Highlights

     Successfully completed a rights offering generating gross proceeds of Cdn$200 million. Proceeds will be used to fund development costs on the Kurdamir and Garmian Blocks and for general and administrative purposes.

     Successfully completed the workover of the Sarqala-1well on the Garmian Block to increase the flow capacity of the well. The well tested at rates of up to 11,500 bbl/d of 40 degree API oil.

     Submitted the Garmian development plan in June 2014 and anticipate approval late 2014. The development plan includes three phases that target oil production of 25,000 to 35,000 bbl/d.

     Submitted a Kurdamir development plan for approval; discussions with KRG to redefine the plan are ongoing.

     Established Proved plus Probable Reserves for the first time by completing an independent evaluation of the Company’s light oi l discovery on the Garmian Block, This evaluation recognizes an initial 12 million barrels of gross 2P Reserves, representing only a small portion of the potential of the Sarqala Discovery.

     Conducted economic valuations of conceptual development for the Kurdamir Block in excess of $1.5 billion. For the Garmian Jeribe/Upper Dhiban, 2P Reserves have a value of $75 million and P50 Prospective Resources have a value of $347 million.

    Next Steps:

    Operations: The Garmian Block’s Hasira-1 exploration well test results anticipated early 2015. During 2015, subject to KRG approval, the Company plans to drill two horizontal or deviated wells (Sarqala-2 and Sarqala-3) during Phase 2 of the Garmian development plan as well as install centralized storage and loading facilities and begin the front end engineering and design work for an incremental 25,000 to 35,000 bbl/d central processing facility for oil. On the Kurdamir Block, Kurdamir-4, the first horizontal development well, to be spud dependent on KRG approval, anticipating first production end 2015. Production: Subject to KRG approval of the Garmian development plan anticipated by early 2015. Sarqala-1production capability rates up to 10,000 bbl/d. Corporate: The Company is executing on phased development plans for its two significant oil and gas field on the Garmian and Kurdamir Blocks. The overall development philosophy for the PSC lands is based on a phased expansion strategy: maximize production through increasing processing facilities and production capabilities and drilling. Corporate Social Responsibility

    WesternZagros aspires to be an industry leader with respect to corporate social responsibility. The six key corporate social responsibility focus areas in the PSC Lands of Kurdistan are local employment, water supply, education, health care, agriculture and recreation. The Company bases its corporate social responsibility initiatives on the UN Global Compact and the ten principles in the areas of human rights, labour, environment and anticorruption.

  • 4 / Corporate Fact Sheet

    2 / Corporate Fact Sheet

    Table 1: See October 2, 2014 Material Change Report for Working Interest Reserves, Contingent Resources and Prospective Resources and further details in respect of the economic analysis completed, including the initial development phases submitted to the KRG, the full field development scenario and pricing and other assumptions.

    Petroleum Contracts

    The Kurdamir and Garmian PSCs each govern separate contract areas. WesternZagros holds a 40% working interest in both PSCs. The Kurdamir contract areas operated by Talisman, with a 40% working interest. The Garmian contract area is operated by WesternZagros with a 40% working interest held by Gazprom Neft. The KRG holds the remaining 20% working interest in both PSCs. The schematic illustrates the sharing of production under the Terms of the Company’s PSCs. Under the PSC terms, the contractor’s portion of “Profit Oil” is based on a sliding scale from 35% to 16% depending on the R-Factor. The R-Factor is established by reference to the ratio of cumulative revenues over cumulative costs. When the ratio is below one, the contractor is entitled to 35% of the Profit Oil. The contractor’s percentage is then reduced on a linear sliding scale to a minimum of 16% when the ratio equals two or greater. Reserves, Contingent Resources and Prospective Resources

    Reserves(1) Block Gross Working Interest (Gross) (5)

    License Reservoir (Classification) (MMbbl) (MMbbl) (MMboe) NPV10

    US$ million (7)

    Garmian Jeribe/Upper

    Dhiban

    1P (6) 3 1 1 33

    2P(6) 12 5 5 75

    3P(6) 23 9 9 216

    Contingent Resources (2) Block Gross P50 (Best Estimate)

    Working Interest (Gross)

    License Reservoir (MMbbl) (MMbbl) (MMboe) NPV10

    US$ million (7)

    Kurdamir Tertiary Oligocene 366 146 288

    1,555 (7)

    Tertiary Eocene 138 55 82

    Prospective Resources

    Block Gross P50 (Best Estimate)

    Working Interest (Gross)

    License Reservoir (MMbbl) (MMbbl) (MMboe) NPV10

    US$ million (7)

    Kurdamir (3)

    Tertiary Oligocene 1004 402 470 (8)

    Tertiary Eocene 91 36 47 (8)

    Cretaceous 108 43 69 (8)

    Garmian (4)

    Jeribe/Upper Dhiban

    (below lowest known oil) 61 24 24 347

    Jeribe/Upper Dhiban

    (potential extension southwest flank) 87 35 35

    (8)

    Upper Fars 63 25 25 (8)

    Mio-Oligocene 41 16 16 (8)

    Eocene 33 13 13 (8)

    Cretaceous 5 2 2 (8)

    18 bbls

    20 - 24% = 27 - 31%

    90bbls

    7bbls 3 7bbls 4bbls

    Royalty Oil 10% of total crude oil

    Total Oil Produced

    Net Available Oil

    100bbls

    10bbls

    32bbls

    WesternZagros (2)

    40%

    Talisman/Gazprom

    Neft 40%

    KRG

    20%

    Cost Recovery Oil up to 45% of net available oil

    Total Profit Oil sharing based on R-Factor slide

    range of 35%/65% 16%/84%

    Contractor Group

    40bbls 1

    50bbls 2

    KRG ** *

    1. WesternZagros entitled to 60% on Kurdamir and 50% on Garmian based on funding required under both PSCs 2. R factor is the ratio of cumulative revenues over cumulative costs 3. KRG is entitled to a 3% capacity building bonus of WesternZagros profit oil for a net effective share of 38.8%.

    See the October 2, 2014 Material Change Report for Garmian Block Gross and Working Interest 2P reserves. In addition, see the Company’s Annual Information Form dated March 13, 2014 (“AIF”) and its MD&A for its most recently completed fiscal quarter for a further description of these reserves, Contingent Resources and Prospective Resources. Additional information relating to